Friday, 11 October 2013

Deputy Science, Technology and Innovation Minister Datuk Dr Abu Bakar Mohamad Diah found himself in hot water after declaring the Lynas rare earth plant in Gebeng, Kuantan, to be "as safe as a kicap factory".

Abu Bakar's reply, which was viewed as a mockery by representatives of the anti-Lynas group and several opposition lawmakers, sparked off a heated argument between them and Abu Bakar, who was fumbling through his notes as he looked for answers.

Australian rare earths miner Lynas Corporation is refusing to publicly disclose the location of a permanent waste storage facility for its processing plant in Malaysia.

Earlier this year, Lynas started commercial production of rare earths, which are used in a wide range of high tech equipment, but the plant on the east coast of peninsular Malaysia has been plagued by operational problems.

For three years, environmentalists and residents have kept up the heat on the plant, and in the latest move, a delegation of residents and environmentalists travelled to the national Parliament in Kuala Lumpur.

Tan Bun Teet from the group, Save Malaysia Stop Lynas wanted to deliver a note to the Science, Technology and Innovation Minister, demanding the company's temporary operating licence be revoked and the plant shut down.

"He is supposed to represent the interests of the people and not Lynas," he said.

It's similar to a soy sauce factory - I give my word that the factory is very, very safe.

'Bumpy ride'

"At the moment, the company has got some fair head winds in front of it," he said.

"It's come from a series of problems that have occurred in the past and I guess the perfect storm if you like over the last 18 months or so."

Lynas ships rare earths concentrate from its mine in Western Australia and processes the material at its plant in the Gebeng industrial estate near the port city of Kuantan, where the company says refining is more cost effective.

Rare earths are used in a wide range of high tech equipment, including smart phones, TVs, wind turbines and cars.

Commerical production started in the June quarter - but Lynas sold just 117 tonnes of processed rare earths, against its target of 11,000 tonnes for the year.

Analysts though, including Deutsche Bank's Chris Terry, say a successful Lynas could be a game changer for the industry.

"Longer term, the company does have a strategic asset, where the world's supply is currently dominated by China," he said.

"But in the short term the company does need to get through several issues before they get to the light at the end of the tunnel."

Those issues include a drop in the price of rare earths, delays and operational problems at the plant, as well as legal battles with environmentalists and residents, who say their meeting with the deputy minister didn't adequately address their concerns.

Resident fears

What are rare earths?

Set of 17 chemical elements. They are all grouped together and mined as one product but are then separated into individual components.

Despite their name, most rare earth elements are relatively plentiful in the Earth's crust.

The name comes from the fact that they are not often found in concentrations large enough to mine.

Vital for the production of technology such as hybrid car batteries, computers, smart phones, wind turbines and weapons.

China produces over 95 per cent of global supplies.

Demand for the rare earths used in car battery manufacturing - dysprosium, neodymium and praseodymium - to grow 790 per cent by 2015.

The protesters are especially concerned about Lynas Corporation's plans for the storage of waste from the plant.

The company maintains the plant poses no health risks and says naturally occurring radiation in the waste will be reduced to almost zero.

That hasn't allayed residents and environmentalists fears about radioactive pollution.

The Opposition member for Kuantan, Fuziah Salleh says her constituents have a right to be concerned.

"They are actually exasperated to the point of despair, because the government is totally deaf to the voices of the people of Kuantan," she said.

"Totally deaf to the concerns and they are continuing to parrot that the plant is safe."

As part of its operating licence conditions, Lynas was required to submit plans to Malaysia's Atomic Energy Licensing Board for a permanent waste disposal facility or PDF, but neither the Board nor the company will disclose its location.

Lawyers for Kuantan residents wrote to the Board in July asking for detailed plans of the PDF, but say they haven't received a response.

In any case, Lynas says it's unlikely the plant will ever need a permanent waste disposal facility because it's recycling the residue into industrial products, like road base.

Residents though remain highly sceptical and opposition candidates running on an anti-Lynas platform won a raft of seats around the plant, in the May general election.

Lynas lost more than $107 million last financial year, and has informed the market that it's set to report another quarter of reduced output, as it continues to work on the plant's operational issues.

Deutsche Bank's Chris Terry says the company's share price is now around 40 cents, compared with its peak value of $2.30 in early 2011.

"The shorter term, into the medium term even, are still quite challenging for the company," he said.

"We would like to see a series of de-risking steps occur before we'd be more positive on Lynas as an investment."

The ABC's request to speak to a Lynas representative was declined.

A spokesman for the company says there'll be no interview opportunities until the next quarterly report is released at the end of October.